Tech gains boost Nasdaq, S&P to new highs, Why Kogan is a buy: ASX to edge lower

The Australian sharemarket is set to edge lower with the SPI futures pointing to a 0.2 per cent drop following Wall St’s mixed performance as growth stocks took charge over value driven names.

Tech names help indexes reset new highs

Growth-focused Nasdaq closed 1 per cent higher to a fresh record high amid falling bond yields as the 10-year treasury notes dipped 6 points to around 1.48 per cent. The value-driven Dow Jones fell 0.4 per cent while the blue-chip S&P 500 grew 0.2 per cent to a fresh all-time high.

The S&P 500 drifted between a narrow range of gains and losses for most of the day. After lunch, the index climbed as investors felt comfortable that the recent inflation hike is transitory and that the Federal Reserve will maintain its support by keeping rates low.

The rise in the delta variant Covid-19 cases amid tighter restrictions drove investors to rotate out of value stocks which saw the Energy sector dive over 3.3 per cent followed by Financials down 0.8 per cent and Industrials shed 0.5 per cent.The biggest winners were Utilities up 1.7 per cent followed by Technology added 1.1 per cent which was powered by big tech names with the likes of Apple, spiked up by 1.3 per cent while Facebook soared 4.2 per cent.

Oil slips as Boeing stalls

Oil prices fell around 2 per cent to US$72.91 ahead of the OPEC meeting on Thursday with the likes of Chevron in the Energy space dipped 3.1 per cent.

The commercial aviation provider Boeing received some not-so-great news about its latest 777 jet, the 777X. The Federal Aviation Administration told the $140 billion provider that the jet is likely to not be approved for commercial service until mid-2023 which saw its tumble down 3.4 per cent on the Dow.

Energy and travel stocks led decline across the Atlantic

European markets closed lower with travel stocks leading losses on new restrictions. London's FTSE marked its worst day over a week pressured down in energy and financial stocks, down 0.9 per cent, Paris closed 0.1 per cent lower while Frankfurt closed 0.3 per cent lower.

Industrial profits softens Asian markets

In Asian markets which also closed lower. Official data showed profits at China’s industrial companies rose 36.4 per cent in May as compared with a year earlier due to increasing costs of production. China's Shanghai Composite closed almost flat at 0.03 per cent while Japan's Nikkei and Hong Kong's Hang Seng inched 0.1 per cent lower.

Gains in iron ore futures while gold and silver rise

On the iron ore front, Rio Tinto fell by 1 per cent while BHP dropped 0.7 per cent in London. Its futures are pointing to a rise of 0.6 per cent.

Elsewhere safe-haven gold is trading $2.90 higher at $1,781 while silver is trading $0.13 higher at $26.25.

ASX 200 – Tues wrap up

Yesterday the Australian sharemarket closed flat (0.01 per cent) at 7,307 as fears of the spread of Covid-19 looms.

Travel stocks came under pressure as Qantas (ASX:QAN) and Webjet (ASX:WEB) tumbled over 4 per cent while investors chased online retail and supermarket providers.

Consumer Staples added 1.5 per cent as the best performing sector for the session while Technology lost ground as the worst performer, fell 2.8 per cent led by losses in Afterpay (ASX:APT) dived 7.5 per cent as the worst performing stock.

Artwork marketplace service Redbubble (ASX:RBL) jumped 8.2 per cent as the best performing stock as investors mulled on their litigation update last week.

Other stand outs were furniture retailer Temple & Webster (ASX:TPW) climbed 10.2 per cent and supermarket giant Woolworths (ASX:WOW) added 2.9 per cent as market participants buy into the $46 billion company amid panic buying.

Local economic news

Today ANZ & Roy Morgan are set to release their weekly sentiment survey with confidence to be weaker following the outbreak of Covid-19 in Sydney for the period covered.

Stock watch

Our weekly stock to watch this week is Kogan.com (ASX:KGN). David Thang, Senior Private Wealth Adviser at Sequoia (ASX:SEQ) rates Kogan.com as a buy. From a technical angle, Kogan.com is bullish for several reasons.

Taking a step back, the share price has declined by almost 66 per cent. This is measured from the October 2020 all-time high of $25.57 down to the May 2021 low of $8.70. Positively, structural support was respected between the $8.70 and $9.10 region as shown by the horizontal-dotted line. Furthermore, a bullish doji formed in May 2021, which is the first sign of buyers coming to the party.

The current month of June has seen additional buying support come through. This is a positive development, and suggestive of higher levels to follow over the months ahead. Should this scenario evolve, then the next upside target zone is expected between $15.14 and $17.13 as illustrated by the orange rectangle.

This area of resistance is made up of the 38.2 and 50 per cent Fibonacci retracement levels respectively which are the horizontal grey lines, along with previous market structure at the $16.40 mark which is the horizontal dotted line.

Lastly, the reference to the MFI 'money flow index', which measures the inflow and outflow of money into an asset over a certain time period, by taking into account both price and volume.

This oscillator has moved out from oversold territory as seen on the purple line on the lower pane, signalling upward momentum to be on the rise.

Shares in Kogan.com closed 6.6 per cent higher at $13.00 yesterday.

IPOs

Polymetals Resources (ASX:POL) is slated to make its debut on the ASX.

Ex-dividends

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